The correlation between bitcoin's price and the Dollar Index has reached its most extreme level in nearly four years, with a 30-day correlation coefficient of -0.90. This indicates a strong inverse relationship, where a weaker dollar tends to boost bitcoin's value, and vice versa.
The coefficient of determination suggests that around 81% of bitcoin's short-term price movements are statistically linked to changes in the Dollar Index. However, the recent rally in bitcoin has stalled, coinciding with a bounce in the Dollar Index. Broader macro risks, including elevated oil prices and geopolitical tensions, appear to be supporting the Dollar Index. Despite sustained inflows into US-listed spot exchange-traded funds, industry leaders remain cautious, with some predicting that bitcoin may not see a meaningful recovery until later in the year.
The ether-bitcoin ratio has also fallen to its lowest level since March 15, with bearish implications for the ETH/BTC pair.